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Facts
The assessee's appeal is filed with a delay of 147 days due to the unavailability of the person handling tax matters, who subsequently passed away. The assessee claims the delay was due to circumstances beyond their control. The assessing officer made an addition of Rs. 2,43,31,182/- on account of unexplained cash deposits.
Held
The Tribunal condoned the delay of 147 days, citing the unusual circumstances and the need for a justice-oriented approach. The Tribunal rejected the assessee's contention that the reassessment proceedings were void ab initio. However, considering the peculiar circumstances and the earlier submission of documents, the Tribunal restored the issue of addition to the file of the Assessing Officer for fresh examination.
Key Issues
1. Validity of reassessment proceedings initiated under Section 147/148 of the Income Tax Act. 2. Whether the assessee was denied a reasonable opportunity of being heard, leading to the addition made by the AO.
Sections Cited
Sec 147, Sec 148, Sec 143(2), Sec 144, Sec 144B, Sec 139(4), Sec 143(1), Sec 143(3), Sec 68, Sec 234A, Sec 234B, Sec 142(1)
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Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: SHRI RAVISH SOOD & SHRI MADHUSUDAN SAWDIA
(निर्धारण वर्ा/Assessment Year:2017-18) M/s. Anantha PVC Pipes Pvt. Ltd., Asst. Commissioner of Income Tax, Vs. Circle-1, Kurnool. Anantapur. PAN:AAGCA0936J (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri T. Rajendra Prasad, C.A. and Shri P. Rosi Reddy, Advocate. रधजस् व द्वधरध/Revenue by:: Dr. Sachin Kumar, SR-DR सुिवधई की तधरीख/Date of hearing: 31/07/2025 घोर्णध की तधरीख/Pronouncement: 06/08/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M.: This appeal is filed by M/s. Anantha PVC Pipes Pvt. Ltd. (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 25.07.2024 for the A.Y. 2017-18.
At the outset, it is observed that there is a delay of 147 days in filing the present appeal before the Tribunal. In this regard, the assessee has filed a petition for condonation of delay accompanied by an affidavit explaining the reasons. The Learned Authorised Representative (“Ld. AR”) submitted that Mr. S. Venkat, who was handling the assessee’s income tax matters, had left from the organization and subsequently passed away in February 2024. All notices and the order passed by the Ld. CIT(A) were served on Mr. Venkat. The Ld. AR further submitted that the assessee became aware of the order of the Ld. CIT(A) only when its bank account was attached by the Revenue in January 2025, and thereafter, it immediately engaged legal counsel and filed the appeal before this Tribunal. The delay of 147 days, therefore, was neither intentional nor deliberate but due to circumstances beyond the control of the assessee. In support of the condonation petition, the Ld. AR relied on the judgment of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal Vs. ITO in Special Leave Petition (Civil) Nos.26310-26311/2024 dated 31.01.2025, wherein the Apex Court has held that a justice oriented and liberal approach must be adopted in condoning delay if the explanation is bona fide and sufficient cause is shown. 2.1 Per contra, the Learned Departmental Representative (“Ld. DR”) strongly opposed the condonation of delay, contending that such inordinate delay should not be condoned in a routine manner. The Ld. DR placed reliance on the decision of the Hon’ble Supreme Court in the case of Jharkhand Urja Utpadan Nigam Ltd. & Anr. vs. M/s. Bharat Heavy Electricals Ltd. [Special Leave Petition (C)
No.9580/2025, order dated 15.04.2025], particularly inviting our attention to paragraphs 33 and 34, where the Hon’ble Supreme Court denied condonation of 301 days delay, observing that it is the duty of every litigant to track the progress of its own case and not blame the other party for not communicating the outcome. The Ld. DR submitted that similar principle should apply here, and the assessee cannot plead ignorance of the order passed by the Ld. CIT(A) as an excuse for delayed filing. 2.2 In rejoinder, the Ld. AR submitted that the facts of the present case are clearly distinguishable from the case relied upon by the Ld. DR. In Jharkhand Urja Utpadan Nigam Ltd. (supra), the petitioner was a government undertaking with access to a dedicated legal team and administrative staff to track litigation. On the contrary, in the present case, the person entrusted with income tax matters, Mr. S. Venkat, had not only left the organisation but also expired before the assessee could be made aware of the appellate order. The absence of institutional support and the sudden demise of the concerned officer constitute sufficient and reasonable cause. 2.3 We have heard the rival contentions and carefully considered the facts of the case. The explanation offered by the assessee for the delay of 147 days is plausible and duly supported by affidavit. It is an established principle that procedural delays must not defeat substantive justice, especially where no malafide intent or negligence is demonstrated. In this context, the reliance placed by the Ld. AR on the decision of the Hon’ble Supreme Court in Vidya Shankar Jaiswal (supra) is well-founded. The Hon’ble Court has reiterated that a liberal and justice-oriented approach must be adopted in considering delay condonation where sufficient cause exists. As regards the objection raised by the Ld. DR based on Jharkhand Urja Utpadan Nigam Ltd. (supra), we find the factual matrix of that case to be materially different. There, the assessee was a government corporation with robust administrative infrastructure and legal departments, and yet failed to pursue its own case. In contrast, the present assessee, a private entity, was dependent on a single officer who passed away, and the delay occurred before the assessee could receive and act on the order. Accordingly, in the interest of justice and fair play, we are inclined to condone the delay of 147 days in filing the appeal before this Tribunal. Accordingly, the delay of 147 days in filing the appeal is condoned and the appeal is hereby admitted for adjudication.
The assessee has raised the following grounds of appeal :
4. The brief facts of the case are that, the assessee is engaged in the business of manufacturing of PVC pipes. It filed its return of income for the assessment year 2017–18 under section 139(4) of the Income Tax Act, 1961 (“the Act”) on 06.08.2018, declaring total loss of Rs.97,10,340/- which included depreciation of Rs.29,49,777/-. As the return was filed belatedly, the Centralized Processing Centre (“CPC”) issued an intimation under section 143(1) of the Act dated 27.11.2019, wherein the depreciation was allowed, but the carry forward of business loss was denied. Later on, the case was selected for scrutiny under section 143(3) of the Act for verification of cash deposits during demonetisation. The assessee submitted various records including audited balance sheet, cash book, sales invoices, excise documents, and bank statements. However, the Learned Assessing Officer (“Ld. AO”) dropped the proceedings under section 143(3) of the Act in view of CBDT Circular dated 29.11.2019 which advised against further action in cases involving invalid returns. 4.1 Subsequently, reassessment proceedings were initiated under section 147 of the Act by issue of notice under section 148 of the Act dated 30.03.2021. In response, the assessee filed a return of income on 30.04.2021 declaring the same loss as in the original return. However, during the reassessment proceedings, the assessee failed to comply with notices issued by the Ld. AO. Consequently, the Ld. AO completed the assessment under section 147 r.w.s. 144 & 144B of the Act on 22.03.2022, making an addition of Rs.2,43,31,182/- on account of unexplained cash deposits and determining the total income of the assessee at Rs.2,43,31,182/-.
5. Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). However, the assessee again failed to comply with the notices during appellate proceedings. The Ld. CIT(A) accordingly dismissed the appeal of the assessee ex parte.
6. Aggrieved with the order of Ld. CIT(A), the assessee is now in appeal before this Tribunal. The Ld. AR submitted that there are two principal issues in this appeal i.e. (i) Invalidity of notice issued under section 148 of the Act and (ii) Addition of Rs.2,43,31,182/- made by the Ld. AO without granting adequate opportunity to the assessee.
On the first issue, the Ld. AR invited our attention to the notice issued under section 143(2) r.w.s. 147 of the Act dated 14.06.2021, placed at page 133 of the paper book. It was submitted that the said notice mentions “Null” for “Issues as per reasons recorded for reopening.” Based on this, the Ld. AR argued that the reassessment proceedings were initiated without recording any reasons, and hence the issuance of notice under section 148 of the Act is void ab initio and the consequential reassessment order is liable to be quashed.
As regards the second issue, the Ld. AR submitted that although the assessee could not comply with notices during reassessment proceedings and appellate proceedings before the Ld. CIT(A), it had earlier furnished all relevant documents during scrutiny proceedings under section 143(3) of the Act, such as, Audited financial statements, Cash book, Sales invoices, excise records and Bank statements, which are placed at page nos. 10 to 87 and 195 to 300 of the paper book. The Ld. AR further submitted that the person handling tax matters on behalf of the company, Mr. S. Venkat, had left the organisation and subsequently passed away in February 2024. This unfortunate event disrupted the assessee’s ability to comply with notices before the Ld. CIT(A) and caused procedural lapses.
The Ld. AR also invited our attention to statement of profit and loss account of the assessee for A.Y. 2017-18 placed at page no. 12 of the paper book showing the turnover of the assessee at Rs.55.55 crores and Balance Sheet of the assessee as at 31.03.2017 placed at page no. 11 of the paper book showing opening trade receivables of Rs.24.45 crores. It was submitted that the assessee is engaged in the manufacturing of PVC pipes and primarily deals with farmers who pay in cash, which is then deposited into bank accounts. Given the high turnover and receivables, the Ld. AR submitted that the cash deposits have a clear nexus with the business of the assessee. The Ld. AR thus prayed for one more opportunity to be provided to the assessee to furnish necessary documentary evidence before the Ld. AO and to have the case decided on merits in accordance with law.
Per contra, as far as the first issue regarding validity of issue of notice under section 148 of the Act is concerned, Ld. DR submitted that the assessee never requested a copy of the recorded reasons before the Ld. AO. Further, the Ld. DR referred to page no. 1 of the assessment order where the Ld. AO has specifically mentioned that the case was reopened due to cash deposits of Rs.2,43,31,182/- during the demonetisation period. It was submitted that the reasons were indeed recorded and the reassessment proceedings are valid in law.
As far as the second issue of the assessee regarding the remand back of the issue to the file of Ld. AO is concerned, the Ld. DR objected for such remand. He submitted that, adequate opportunity has already been provided to the assessee by the lower authorities and hence no further opportunity should be provided to the assessee. 12. We have considered the submissions of both parties and perused the materials on record. On the issue of validity of notice under section 148 of the Act , we have gone through the page no.1 of the order of Ld. AO, which is to the following effect :
On perusal of above, we observe that at first para of page no.1 of the order, the reason for reopening was specifically mentioned as cash deposits of Rs.2,43,31,182/-. Therefore, merely because the notice under section 143(2) of the Act mentioned “Null” for “Issues as per reasons recorded for reopening”, does not render the reassessment invalid. The existence of reasons recorded in the assessment order satisfies the statutory requirement under section 147 of the Act. Hence, we are unable to accept the contention of the assessee that the proceedings are void ab initio. Accordingly, the first objection of the assessee is rejected.
On the issue of denial of opportunity and addition made by the Ld. AO, it is an admitted position that the assessee failed to comply with notices issued during the reassessment and appellate proceedings. However, it is equally a matter of record that the assessee had earlier submitted a substantial set of documents during the proceedings under section 143(3) of the Act, including audited financials, sales records, and bank statements. The nature of the business, its customer base (farmers), and large-scale cash transactions support the assessee’s claim that cash deposits could plausibly arise from its business activity. Given the peculiar circumstances, especially the demise of the person responsible for tax matters and the assessee’s substantial turnover, we are of the considered view that the assessee deserves a final opportunity to substantiate its case. Accordingly, in the interest of natural justice, we deem it fit to restore the issue of addition of Rs.2,43,31,182/- to the file of the Ld. AO. The assessee is directed to fully cooperate in the proceedings and file all relevant documentary evidence. The Ld. AO shall examine the claim afresh after affording a reasonable opportunity of being heard to the assessee and complete the reassessment in accordance with law.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 6th August, 2025.